just On Call - Pernod Ricard looks for "critical mass" with Kenwood Vineyards buy
Pernod released its YTD results yesterday
Pernod Ricard has said its purchase of California's Kenwood Vineyards will give it the “critical mass” its US portfolio lacked.
Gilles Bogaert, Pernod's CFO, told analysts in a call yesterday (24 April) that US wine was the company's “one weakness” because it does not own a US-origin producer. “To have critical mass in the US you need to have US-origin wine,” Bogaert said.
The CFO also said Pernod's takeover will take Kenwood, owned by F Korbel & Bros, to new markets across the country, particularly in the east.
“We believe this brand will bring synergies to our wine portfolio and our wine sales force in the US will bring synergies to Kenwood, and that will develop the brand in more states in the US,” he said.
Meanwhile, Bogaert hinted that Pernod may line up further acquistions in the country.
“Looking forward, we are open to more acquisitions, more in spirits, and the US is clearly a priority market to do so,” he said.
Bogaert was speaking after the release of Pernod's YTD results that saw sales slide by 7%, partly due to continuing problems for international spirits in China.
Pernod's Irish whiskey brand, Jameson, continued to show strong growth. However a sales increase of 13% was slower than the brand's 17% growth in fiscal 2012/13.
Bogaert denied the results signalled the start of a long-term slowdown for Jameson, saying it was “largely technical” and because of destocking and bad weather.
He added: “We can't maintain 20% growth for the next ten years - trees don’t grow to the sky. But we can have good double-digit growth in Jameson in the future.”
Last month, Pernod became involved in a lawsuit with a US wine company that owns the Jamieson Ranch Vineyards brand. Pernod's Irish Distillers unit, which handles Jameson, argues the wine brand could cause consumer confusion.
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